Europe’s top securities regulator warns that soaring inflation could drive investors toward cryptocurrencies. Highlighting the “imbalance” in the way each EU country deals with crypto, regulators call for a common regulatory framework among European countries.
Inflation may drive investors toward crypto, EU regulators say
The European Securities and Markets Authority (ESMA), the EU’s securities market regulator, warned that soaring inflation could drive retail investors toward cryptocurrencies, Bloomberg reported on Thursday.
The regulator has also called for a formal legal framework to govern the crypto industry across all EU countries.
ESMA chair Verena Ross said in an interview last week.
As inflation rises, investors will look for investments that can compensate for inflation and provide greater returns, which may lead to taking greater risks.
“That’s something we’re monitoring very closely,” she stressed.
Many investors believe bitcoin is a great hedge against inflation, including renowned hedge fund manager Paul Tudor Jones. However, the crypto asset has been very volatile, falling 26% over the past 30 days. This month, the crypto market as a whole lost about $500 billion.
Currently, each EU country sets its own rules for crypto and makes decisions based on local laws. There is no common framework for the crypto sector.
The ESMA Chairman elaborates.
Currently, there is no EU regulatory framework for this type of entity, so there is currently an imbalance as to how national supervisors treat these entities and how they make decisions.
“That’s where a common regulatory framework would help,” she stressed.
Last month, the European Parliament gave ESMA the power to regulate crypto issuers and service providers.
The European Parliament and the European Council are currently considering the Crypto Asset Market (MiCA) bill, introduced in 2020, which will provide a legal framework for crypto asset markets to develop in the EU.
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